Source: Golden Ten Data
Goldman Sachs's chief economist said he expects strong US economic growth to cool down with inflation this year, and he would be “very surprised” if the Federal Reserve did not cut interest rates this year.
Goldman Sachs chief economist Jan Hatzius (Jan Hatzius) said on Friday that he still expects the Federal Reserve to cut interest rates three times this year, adding that he would be “very surprised” if the Fed finally decided that no interest rate cuts were necessary.
Shortly before he made these remarks, Minneapolis Federal Reserve Chairman Kashkari became the latest policy maker to make an astonishing statement. He said that if inflation continues to be high, the Federal Reserve may not cut interest rates until the end of the year.
In an interview with “Pensions and Investments” on Thursday, Kashkari said, “If we continue to see inflation sideways, then I question whether the Federal Reserve needs to cut interest rates.”
Additionally, Federal Reserve Chairman Powell said earlier this week that policymakers will need some time to assess the current inflation situation, so the timing of potential interest rate cuts is still uncertain.
Market participants have been closely watching comments from Federal Reserve officials about the number of potential interest rate cuts this year, and many will be watching Friday's employment data to find more clues about the labor market and inflation.
In an interview with reporters on the sidelines of the Ambos Forum on Friday, Hazus said that he is optimistic about the future of the US economy.
Hazus said, “I'm very optimistic about the outlook for this year. Economic growth will be much higher than expected, and this year's growth rate is likely to be close to 3%.”
“As far as recession risks are concerned, we are far more optimistic than market consensus. We think the probability of a recession in the next 12 months is 15%. This is the average probability of a recession, because there will be a recession approximately every 7 years after the war.”
Hazus also said that he is optimistic that America's strong economic growth this year will keep pace with the cooling of inflation. It is expected that the personal consumer expenditure price index (PCE) will reach 2.4% by the end of 2024 and 2% next year.
Hazus pointed out, “In this environment, according to Powell and other officials, I expect the Federal Reserve to take some measures to cut interest rates.”
He added, “Of course, the timing of interest rate cuts depends on recent data and the Federal Reserve's response, but according to our predictions, I would be very, very surprised if interest rates were not cut this year.”
The Federal Reserve kept interest rates unchanged for the fifth consecutive meeting last month, in line with expectations, and kept the benchmark overnight loan interest rate between 5.25% and 5.5%. The Federal Reserve also hinted that it is expected to cut interest rates three times, 25 basis points each time, by the end of 2024.
As of Friday morning, according to data from the Chicago Mercantile Exchange (CME)'s US Federal Reserve Watch Tool, traders expect the possibility that the Fed will keep interest rates unchanged at the May policy meeting is close to 94%, while the possibility of cutting interest rates in June is about 60%, a sharp drop from a week ago.
Editor/jayden